Global Market Highlights
The DJIA notched +0.07% higher on Friday (05/01), as the S&P 500 (+0.18%) and Nasdaq (+0.10%) managed to rebound. A continued sell off in the UST 10-yr notes kept the pressure on stocks’ movements; the market further curbed their Fed rate cut expectations as US December-23 nonfarm payrolls addition came in stronger at 216k than expectations of a meager 175k, accompanied by an unbudging US December-23 unemployment rate reading at 3.7% (vs. an expected increase to 3.8%). Today the market will be looking forward to several data releases such as: 1) EA Economic Sentiment Dec-23; 2) EA Retail Sales Dec-23; 3) Germany Balance of Trade Nov-23.
Domestic Update
Bank Indonesia reports that, based on transactions from January 2 to 4, 2024, non-residents in the domestic financial market recorded a net buy of IDR 8.61 trillion, consisting of a net buy of IDR 5.07 trillion in the SBN, a net buy of IDR 1.47 trillion in the stock market, and a net buy of IDR 2.08 trillion in the SRBI market. MNCS Comment: We observe sustained inflows amid the increase in the 10-year SBN yield to 6.66% in the bond market. Meanwhile, the stock market also maintains an inflow momentum since December 2023, reflecting a bullish market sentiment amid expectations of a rate cut in March 2023. However, we anticipate volatility in the second week as investors closely watch the US inflation data for Dec-2023, which is expected to rise according to consensus, and evaluate other macroeconomic indicators.
Company News
1. BBTN IJ succeeded in trimming their NPL (non-performing loan) ratio through an asset settlement transaction of IDR900 billion with PT Perusahaan Pengelola Aset (PPA) at the end of FY23 (Emiten News). MNCS Comment: We assess the NPL asset sell off maneuver carried out by BBTN to positively impact the company by increasing their NPL coverage (~142% as of 9M23), cutting the burden of provisions for impairment losses, and supporting their NIM performance in FY24E. BBTN is currently trading at 0.63x PBV.
2. PTPP IJ records new contract values in FY23E reaching IDR 31.67 trillion (Market Bisnis). MNCS Comment: Consequently, the growth in new contract values is relatively limited at +1.5% YoY (vs IDR 31.2 trillion in FY22). Meanwhile, the realization of new contract values reached 91.8%-93.1% of the target of IDR 34.0-34.5 trillion in FY23E. Currently, PTPP is traded at a level of 8.69x/0.25X PER/PBV.
3. ISSP IJ is optimistic to increase +10% revenue growth and prepares IDR250 billion capex in FY24 (Kontan). MNCS Comment: We view this target to be approachable considering ISSP’s performance in 9M23 to still hit +0.53% revenue and +24.20% net income growth (YoY) despite the pressure of dropping steel prices. As per 3Q23, the company has successfully increased +170.75% sales volume since 1Q23 and is planning to explore new export opportunities this year. ISSP is currently traded at level 5.94x/0.48x PER/PBV.
IHSG Updates
The JCI declined by -0.12% to 7,350.62 on Friday (05/01), amidst by significant net foreign buy of IDR1.4 trillion. Most sectors weakened and slowed the index down, led by the healthcare sector (-0.78%) and followed by the consumer non-cyclicals sector (-0.64%). In contrast, some growing sectors were led by the financials sector (+0.87%) and followed by the properties & real estate sector (+0.45%). The index weakened as investors reacted on the rose of 10-year SBN yield to 6.66%. The Rupiah closed lower at IDR15,515/USD. We estimate the IHSG will move within the price range of 7,338-7,386. Today's Recommendations: AKRA, EXCL, PGEO, TLKM.
Corporate Actions
IPO: CGAS (IDR338/share)
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